Top debit cards and alternatives for businesses 2024

In recent years, debit cards have surged in popularity within Hong Kong’s bank card market. Like credit cards, most debit cards offer attractive benefits such as annual fee waivers and spending rewards. If you’re curious about how they compare, this article provides a detailed comparison of debit cards, ATM cards, and credit cards to help you select the bank card best suited to your spending habits. Additionally, you’ll discover the advantages of using debit cards for both personal and business purposes.

What is a debit card?

A debit card is a payment card that is directly linked to your bank account. When you make a purchase, the funds are immediately deducted from your account, similar to withdrawing cash from an ATM. This means that you can only spend up to the available balance in your bank account.

The primary difference between debit cards and ATM cards is in their functionality. ATM cards are mainly used for cash withdrawals and typically process transactions through networks like UnionPay or EPS. On the other hand, debit cards can be used for a wide range of transactions through major payment networks such as Visa and Mastercard, as well as other payment gateways. This makes debit cards more versatile and convenient for everyday use.

What are the features of a debit card? Who is it suitable for?

A debit card deducts funds directly from your bank account, so transactions are only successful if you have sufficient funds. This means you can't spend more than you have, making debit cards ideal for careful consumers who prefer to stay within their budget. Additionally, since applying for a debit card doesn't require proof of income, self-employed individuals, homemakers, and students can easily apply for one.

What are credit cards and debit cards?

A credit card is a loan product offered by financial institutions. Applicants must submit proof of income or assets, and most financial institutions will check the applicant’s credit report through TransUnion before approving a credit limit. Once approved, the credit limit is reduced with each transaction, allowing users to spend money they haven't yet earned. However, late repayments can result in penalty interest, handling fees, and potential negative impacts on the user’s credit rating.

A comparison between debit cards, credit cards, and ATM cards

For personal cardholders:

If you enjoy shopping and frequently make purchases online or in-store, using a credit card can offer several advantages. You can enjoy local and overseas spending rewards, and you won’t have to worry about insufficient account balances for high-value purchases. Additionally, you can opt for instalment plans to manage your payments more conveniently.

For business cardholders:

If you frequently make overseas transactions and are concerned about the waiting times and handling fees for exchanging currency through banks, a business debit card is a great choice. It allows you to exchange foreign currency in advance at favorable rates, enabling you to make international transactions at any time with reduced foreign exchange costs.

Airwallex Borderless Cards – specially designed for company expenses

While many banks offer debit cards and credit cards for personal use, there are fewer options available for companies. Airwallex Borderless Cards can be a convenient option for both companies and employees, as an alternative to company debit cards. Companies can:

• Save up to 90% on international transaction fees by directly paying in foreign currencies for certain business expenses, such as advertising costs and SaaS subscriptions in US dollars

• Save on administrative costs by opening an account with $0 annual or monthly fees

• Easily manage company expenses by setting individual spending limits for each card and linking your accounts to the online accounting software Xero

Employees can:

• Make transactions in 140+ currencies and save on international transaction fees

• Add Airwallex Borderless Card to Google Pay or Apple Pay to pay for corporate gifts and expenses related to client meetings

• Avoid unnecessary upfront expenses and complicated reimbursement procedures

Frequently asked questions

1. What are the limitations of debit cards?

As funds are deducted from a linked bank account when a debit card transaction is made, cardholders must ensure the account balance is sufficient to avoid transaction failures. This mechanism also makes it difficult to recover losses in the case of card theft. Additionally, spending rewards for debit cards are typically smaller.

2. What are the differences between physical cards and virtual cards?

Physical cards and virtual cards generally offer similar functionality, benefits, and rewards, though this can vary depending on the provider. Physical cards typically have information printed on them, along with a chip or magnetic stripe, and cardholders need to tap or swipe them to initiate a transaction. Virtual cards, on the other hand, function like electronic bank cards and do not require physical interaction.

Airwallex Borderless Cards are available in both physical and virtual formats, and can be created in just a few clicks. Virtual Borderless Cards allow cardholders to conduct contactless payments, such as making transactions via Apple Pay or Google Pay.